Financial/Insurance Expenses During Residency

[DeadCactus]

Trying to put together a rough idea of what expenses to plan for when budgeting for residency. Obviously there are the expenses for room & board, transportation, and other "life" expenses. But before I get to budgeting those I wanted to set aside the money needed for financial and insurance related expenses I've got:

Roth IRA
Student Loan Repayment (IRB or Otherwise) + Any Other Debt
Disability Insurance
Life Insurance

I left off health insurance and a HSA because you often get coverage via the residency. I also left off an umbrella plan because I figure that is more of an attending concern than something a broke resident with little net worth needs.

Anything else?

Obviously there are other considerations like an emergency fund, general savings, additional retirement contributions, etc. I'm just trying to list out the main priorities that shouldn't be subjected to the give and take of making a budget and balancing lifestyle concerns with financial concerns.

Also any rough estimates on how much disability and life insurance run?

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[JacobMcCandles]

I got a quote for life insurance as a 26 year old male, healthy, non-smoker, 20 year term, $1M for $425 a year. Try term4sale.com to get your best deal. I initially tried a local agent and they wanted nearly $600 a year.

As far as disability, I haven't gotten all my quotes yet but I imagine I'll end up in the $75 per month area. This includes several riders including one to purchase additional coverage in the future. There's so many bells and whistles to disability insurance that it can make it tough to compare.

 

[The White Coat Investor]

Trying to put together a rough idea of what expenses to plan for when budgeting for residency. Obviously there are the expenses for room & board, transportation, and other "life" expenses. But before I get to budgeting those I wanted to set aside the money needed for financial and insurance related expenses I've got:

Roth IRA
Student Loan Repayment (IRB or Otherwise) + Any Other Debt
Disability Insurance
Life Insurance

I left off health insurance and a HSA because you often get coverage via the residency. I also left off an umbrella plan because I figure that is more of an attending concern than something a broke resident with little net worth needs.

Anything else?

Obviously there are other considerations like an emergency fund, general savings, additional retirement contributions, etc. I'm just trying to list out the main priorities that shouldn't be subjected to the give and take of making a budget and balancing lifestyle concerns with financial concerns.

Also any rough estimates on how much disability and life insurance run?

I think you have a pretty good handle on things.

I'd plan on $75-150 a month for disability insurance. It generally runs about 2-5% of the income you're protecting. You can probably only protect something like $3500/month as a resident, so that's 3500*.03=$105.

Do you actually need life insurance? Is there a spouse or kids depending on you financially? If so, buy a big fat term life policy. Say $1 Million 30 year level term. That'll run you (for a 28 year old healthy male) ~ $60 a month.

To max out a personal Roth IRA, it's $5K/12= $417/month. Add another $417/month for a spousal IRA.

I don't know about your student loans. Don't take out any other debt as a med student or resident. You probably won't be eligible for an HSA as a resident.

You might find this helpful:

http://whitecoatinvestor.com/the-five-big-money-items-you-should-do-as-a-resident/

 

[DeadCactus]

Thank you both for the responses. And thanks for all the work you've put into your blog, ActiveDutyMD. It's been a really helpful resource.

I don't need life insurance at this point: is there a benefit to getting it while young and healthy or is that primarily an issue with disability?

Also, I'm a little unsure about how to approach insurance in regards to my tendency to gravitate toward "dangerous" hobbies. It seems like life insurance with fewer exclusions can be had for a slightly higher premium by going through hobby-specific organizations. But disability seems like a whole different issue. I guess you just have to accept that risk? Is there any real benefit to staying away from dangerous hobbies for a year or two before applying? I have to imagine the insurance companies always include some verbiage to protect them from covering you if you fail to disclose an old or newly adopted hobby and sustain an injury whether they also add a special rider or not.

 

[freaker]

With disability insurance, it's all about the fine print. Go through it thoroughly. It's expensive.

Most residencies offer group disability protection, which isn't nearly as comprehensive or as ideal as individual coverage. I've been looking at individual disability insurance, and at 33 with a clean bill of health (normal BMI, BP), I'm looking at roughly $146 per month for $5,000 per month coverage with a 3% cost of living adjustment, same occupation coverage, non-cancelable, catastrophic coverage, and a 90-day elimination period (length of time before disability kicks in). That was through Principle, which offered a 20% discount via my GME. Guardian, Standard, and Northwest Mutual were far more expensive for me for similar policies.

Term life insurance is a lot easier. I'm buying a 1.25 million dollar 20-year policy for $46 per month through Banner. I'm married with kids. Term life isn't that expensive provided you're still in your early 30s, but it becomes increasingly expensive. I don't think I'd buy, anyway, if I wasn't married.

I'm having to put off disability, I think, until my second year of fellowship, but that's just the present financial reality and my wife being unwilling to live with further budget cuts.

You can tenatively use a ROTH IRA as an emergency fund, but I wouldn't put off putting an emergency fund together.

 

[southerndoc]

I just realized that one can still get social security disability in addition to private disability. So private insurance doesn't reduce your social security benefit.

 

[Igor4sugry]

Take some time on buying disability insurance. I went through about 5-6 agents before I found what I wanted. They are all salesmen and will give you similar information.

If an agent is not offering any discounts on policies move on. Price range for my policy search (own occupation, $2,500 benefit, FPO) was $40-$70/month.
Tell them upfront what you want upfront (all the riders and features) and what companies you want quotes from.

I would argue that buying in residency is much cheaper than later.

In terms of life insurance you can always buy 200k or 300k and purchase more later.

 

[DeadCactus]

Had a question come up and so I thought I'd revisit this thread. I will most likely start a hobby or two on the next year that would be concidered dangerous by most insurance companies. Am I correct in thinking I should sign up for disability and life insurance before starting these hobbies?

 

[DocProtector]

Yes. Yes. Yes.... Before you sign up for even a class to do something...

 

[DocProtector]

I just realized that one can still get social security disability in addition to private disability. So private insurance doesn't reduce your social security benefit.

Correct as long as you dd not add the SS rider to your policy, which the agent should not have...

 

[DocProtector]

Had a question come up and so I thought I'd revisit this thread. I will most likely start a hobby or two on the next year that would be concidered dangerous by most insurance companies. Am I correct in thinking I should sign up for disability and life insurance before starting these hobbies?

Yes. Yes. Yes.... Before you sign up for even a class to do something...

 

[TexasPhysician]

I think you have a pretty good handle on things.

I'd plan on $75-150 a month for disability insurance. It generally runs about 2-5% of the income you're protecting. You can probably only protect something like $3500/month as a resident, so that's 3500*.03=$105.

Close. Residents are given a bump for being in a future high earning class - we get up to $5k/month of disability benefits.

I went with Guardian due to it being the best policy for me. Price is roughly $170/month. I'm in my 20's.